this, having urged his own party to pass the bill. In the event, not even the Republicans from Arizona, McCain's home state, voted for it.

Republican leaders blamed the Democrats' Congressional leader, Nancy Pelosi, for delivering a speech attacking Republicans shortly before the vote."They claim to be free market advocates, when it's really an anything goes mentality," she said. "No supervision. No discipline. And if you fail, you will have a golden parachute and the taxpayer will bail you out."

Several Republicans who had promised to support the bill flinched at the idea of being Pelosi's poodles. The Republican Rep Paul Broun of Georgia explained his objection to the bill: "This is a huge cow patty with a piece of marshmallow stuck in the middle of it and I am not going to eat that cow patty."

What now? President Bush issued a terse statement expressing "disappointment". Treasury Secretary Hank Paulson said he would work on an alternative plan, saying: "This is much too important to simply let fail." In London, Vince Cable, Lib Dem Treasury

spokesman, and one of those expecting the FTSE to take a big hit today, said: "When people calm down they will realise that the US Congress will have a fresh go at this and produce a better package."

In America, the optimists take a similar line, saying the failure of the bill presents an opportunity to start again and construct a plan that appears less of blank cheque to financiers. Among conservative economists, there are still those who believe the markets will resolve the crisis more efficiently than Government intervention.

If markets stabilise after what is bound to be a turbulent 24 hours, they will have proved their point. But if markets continue to collapse, as seems more likely, the pressure on Congress to vote in a new rescue package will be considerable. There were reports emerging last night that American bank customers are getting the jitters following the takeover of Wachovia, withdrawing savings from banks they consider at risk. If this translates into a run on the banks, that pressure will only mount.